TA downgrades Westports as tariff threat escalates
'Should negotiations fall through, we believe the looming 25% export tariff would significantly undermine Malaysia's trade competitiveness, putting the country at a distinct disadvantage,' said TA.
More critically, TA expect tariff-inflated U.S. imports to dampen consumer spending in quarter four 2025, particularly given that many consumers likely stocked up during the 90-day tariff reprieve.
Recently, President Trump has indicated that all countries will face tariffs ranging from 15% to 50%. As such, Malaysia would be able to minimise the impact from the structural change only if the tariff is set at 20% levels or near to its peers, that is, Vietnam (20%), the Philippines (19%), Indonesia (19%), Japan (15%) and EU (15%).
As the access to US' high-tech chips and China's rare earth minerals and magnets would remain the key concerns of both countries and subject to export restrictions, we believe the rule of origin would also be applied to Malaysian exports as Malaysia is one of the important transhipment hubs in the strait of Malacca.
In other words, higher tariff could be imposed on goods transhipped through Malaysia like the trade deal between US-Vietnam, which includes a 40% tariff on transhipment.
We keep our FY25-27 earnings unchanged at this juncture and maintain Westports' financial year 2025 (FY25) transhipment and gateway volume growth assumptions of 3% and 2% respectively, pending the tariff outcome in Aug-25. TA downgrades Westports to Sell ahead of the looming risk from the trade tariff. —July 30, 2025
Main image: BusinessToday
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